As my son has gotten older he’s really started getting a grasp on money but when he was 7 years and under, he just didn’t get money all that well. Some of us, as parents make many mistakes when dealing with money and kids, so the kids aren’t just to blame. How we can help our youngest kids is to make money more real. Your child may not get it right away but the more you focus on money as a real issue that matters to your child, the more he’ll start to understand. Below are some simple things you can do to teach your little one about money and finances.

• Allow your child to be the household coupon clipper. He can even hold onto them at the store and kids 6 and up can be taught to use a calculator to figure how much a 50 cent coupon will save on cereal.
• Make your child the king of green (money and planet wise). Have him save bottles in the proper recycling bin then take them back to the store for cash back. If your state doesn’t do this explain how recycling can save you money on your trash bill. You can also put your little one in charge of lights. If he makes sure they stay off when not in use, hopefully you’ll save a little money on your electricity bill. Show your little one the bill amount for last month, then show him the new bill – if you guys saved any money let him have it to spend on a small item.
• Put him in charge of the family coin jar. Once it’s full the two of you can take it to the bank or a coin machine, cash them in, and he’ll see how it adds up to paper money. Let him help decide which family fund the savings should go to.

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How to pull it off:

Give each child a set budget for gifts. I think it’s best if they use some of their own saved money too – from an allowance or birthday, but I’m not too strict on this because I know my son can’t get a job at eight years old. I usually give him some money and he’ll use $10-20 of his own (a lot for a little kid to give up if you consider the situation from their POV).

Have your child make a list of gift ideas. When Cedar was too little to write he’d draw his gift ideas, now he makes a short list. It’s often really hard for kids to think of gift ideas. Try the following to encourage them…

• Go through sale ads in the paper.
• Ask the right questions – “What does aunt Susan like to do for fun”, “Do you think your teacher would like homemade cookies or a nice pen?”, “What are your little brother’s favorite types of toys?” Leave the questions open ended so your child can come up with gift ideas on his own.

Have your child write down estimated cost per person before heading to the store – i.e. $10 for dad, $8 for his best friend, and so on.

Encourage meaning over the gift – for example, if your child buys the material for making a homemade picture frame will it be more loved than a flat out purchased gift? Could he help his grandma clean her basement? Get him thinking about how he can make the holiday gifts more meaningful and less $ related.

How do you handle holiday shopping and gifts with the kiddos?

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What you can do to keep your kiddos calm when money is tight:

Don’t hide the issues: Kids are smart enough to handle money issues. They can be taught about the family budget. It’s important to offer straight facts – “We can’t afford that right now, but if we save up, maybe we can” or “I know it sucks that we can’t go on vacation this year, but we can plan some fun right here.” Kids are great at imagining the worst and if you don’t fill them in a bit, that’s exactly what they’ll do.

Do look for the bright side: Yeah, some costs may need to go but there’s always a way to be more positive. I.e. the bright side of canceling cable is that you have more time to spend outside as a family. The bright side of less grocery money is super creative cooking ideas. It’s absolutely easier to have more than enough money vs. not enough, but for your kids sake look for the silver lining.

Don’t make them responsible: I’ve heard parents tell their kids things like, “Kids are so expensive… you should go easy on me since I’m depressed over losing my job…” and worse. You ARE NOT being a very good parent or nice person if you make your child responsible for your feelings during an economic crisis or in anyway make your child feel like he’s the reason you’re in a tight money situation. Kids are part of the situation, but it’s not their fault and frankly being a kid is hard enough without parent guilt trips.

Do look for creative alternatives and support: Kids need to see that in a time of crisis you can be resourceful and find a way to make it all work. Can you pool some resources with another family (after-school child care for example) or walk more and drive less to save gas? Can you hold a garage sale, play games and do activities that are low cost vs. expensive? There are lots of options for fun that involve no money at all and when you help your kids to find these options it makes them more independently resource. It’s also better to surround your family with friends, a church, family, and so on when times are hard because it makes everyone feel better.

How are you helping your kids during these tough economic times?

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If you consider a small child’s point of view, it makes no sense where money comes from if you only see people pay with cards. It also makes less sense if you don’t explain the ATM and how it works (i.e. there’s not some major stock pile of cash in that machine).

Once in a while it’s good to pay with cash, if only so your kids can get an idea about limits. Garage sales are a perfect time to use cash. Go to the ATM with your child and explain why you take a specific amount out and also let him know that there’s not an endless supply inside that machine. Explain limits of your checking account. Take your cash and head to the garage sales and when you’re out of money for the day, you’re out.

Paper money is also good for allowances of course. In some cases I’ve seen a switch in rewards for kids. Say a kid does an extra chore, I’ve seen parents offer a toy up as the reward. However, I think parents who do this may be missing a key teaching opportunity. If a child is given money they’ll have to count is out, see if they have enough for a toy, and make decisions about buying it or not. A toy vs. money is not as concrete a way to teach finances to a child.

• How to totally mess up your kids when it comes to money
• Tips for dealing with teen money issues
• Teach kids about budgeting

How do you teach your child about money? What’s worked best for you?

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Planet Orange now offers parents, educators, and children enhanced learning tools and games having to do with finances and money. There are a variety of space missions at Planet Orange, used to help kids discover the importance and value of money along with personal finance lessons through fun and engaging games and activities.

A site like Planet Orange is a great resource for parents. A recent survey conducted by ING DIRECT found that 94% of parents want to teach their children about the importance of money but may feel unprepared to do so effectively. Planet Orange, is geared toward children in grades one through six and topics like earning, saving, spending and investing are all covered in an interactive, space themed manner. There’s also a Teacher’s Resource Center with tutorials, free lesson plans, and supplemental information and tools to enhance the learning experience.

I visited the site and it’s colorful and fun, and best of all not one of those kid sites that talks down to kids. It’s a smart resource that kids can actually learn from. Keep in mind that kids may need a parent’s help to register though, for a kids site I was sort of surprised at the long registration form.

Visit Planet Orange and help your kids blast off into financial know-how.

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If you snag a cool piggy bank your child may be more apt to drop his dimes and nickles in. Heck, most adults, I think would be more likely to save with these banks around…

My favorite first – the I’L Cativo & I’L Buono Piggy Banks. Terribly unique money saving gear in ceramic.

notneutral piggy bank – just $20 gets your kid (or you) this modern and fun piggy bank. This porcelain piggy comes in three patterns (Pretty, Chick and Count).

If you’re one of those rare birds not counting change right now, then the Dwell banks are a nice splurge. At $78 these banks aren’t cheap but they are hand laqured herloom quilaty artistic and bankable objects. Banks come in three beautiful styles. I like snail bank best, but there’s also elephant bank or hippopotamus bank.

Monster money eating banks – eats your cash while making hilariously witty comments like, “Money, money in my tummy. Uurp!” Nice. Will totally impress kids.

Amigos Recycled Leather Piggy Bank Friend Figures – cool and eco-friendly. Comes in other colors, but I like the blue shown above best.

Little Bud Posh Pig Piggy Banks in an array of interesting colors and designs.

Can’t remember why you’re saving? The Money Savvy Pig can help. Great for kids and adults. Comes in many colors, but I like the special platinum piggy best. See it here.

Last up, the freakiest bank you’ll ever see.

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Start younger than the teen years: Hopefully, you did talk to your kids about money from the get-go, because that sets your teen up for money know-how early. If you keep mum about money responsibilities, you can’t expect your teens to act responsible about money issues.

Make a saving budget for big items: Teens need some free spending money each week, but if they want to save for big purchases, it can help to see it visually. Help them to jot down how much they’d need to save per week or month in order to afford a bigger ticket item. Then they can know how much they have available to spend.

Deposit cash for your teens: If you put spending money directly into a savings account for your teen, rather than their pocket, they may be more likely to keep it in the bank.

Match funds like an employer would: When your teen grows up their job will likely match retirement funds if not, their savings or bonds will grow with time. Give them that sort of experience. If your teen agrees that saving some money each month is a good plan, match their savings up to a specific amount. This is great motivation to save for a big ticket want or even long-term goals.

Get them gear without making them dip into savings: Gift cards make great holiday gifts for teens because they get the gear they want and can save their cash.

Provide for basics: Some parents (mine included) feel like teens should pay for everything from clothing to cosmetics to shampoo. If you had kids, it’s your responsibility to buy them the basics they need. General clothing, shampoo, and  so on should be covered by you. Extras like fancy lip gloss or expensive boots are another story, but don’t make your teen provide for all their own stuff so early on – that makes the teen years pretty stressful.

Let them make mistakes and live with them: Everyone makes mistakes. If your teen continually runs out of cash mid-month, don’t always cover the extras they want. If they know they can always get more money (if they don’t budget) they won’t bother with budgeting. Don’t belittle their mistakes though – rudeness is lame. Discuss better options, but don’t rag on them this way they’ll come to you with questions.

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Explaining the concept of money:

Money is weird to kids; something I never realized until I tried to teach my son about it and he told me that he thought that “A toy car and a house probably cost about the same.” Just showing a kid money or just talking about it, is super abstract. Real life applications work better. Allow your kid to pay for items on a short shopping trip so they can see what it’s like to hand over cash and get a bag of food in return. Take them to the toy store with $10 and then go find all the items they could actually afford – also point out some they can’t afford and discuss how much more money they’d need to get the item.

Explaining the concept of budgeting:

You can use a pie chart or envelopes for this. If you use a pie chart (better for older kiddos) then chart off different areas like food, rent, electricity, savings, and extras. Envelopes are really good for teaching kids about the budget – even little kids seem to get this technique.

Grab some pretend paper money (preferably about how much is in the family budget each month). Stack it up and then have your kid help to brainstorm envelope categories – i.e. grocery, water bill, pet supplies, and so on. Make sure you have one envelope marked as savings and one marked as extra (or fun) money. After you jot down categories on each envelope have your child help you put the correct amounts per bill into each envelope. This is a good visual way to see how much cash ends up in the “fun or leftover” category.

Explaining the concept of a deal or choice:

The most common two ways people save money is by getting a great deal or by making a choice. Teach your child about deals. For example, if they always want a specific cereal, teach them how to find the store brand, a coupon, a sale, or some other way to get a better deal. Then point out that the money saved on the deal goes into the leftover money category. Teach about choices too. So if their choice is to skip the cereal above altogether, they can save even more money into the leftover category.

NOW: Tell me some of your best ideas for teaching kids about budgeting…

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I’ve heard all the excuses…

• “I don’t want my kids to worry about money issues – they should be having fun.”
• “There’s no way my kid will understand.”
• “The budget is an adult issue.”
• “It’s too personal to discuss with the kids.”

And so on and so on.

I’m more of the mindset that the family budget is just that; the FAMILY budget. If the family budget is for the goals and good of the family, then kids can and should be involved.

Why kids should be involved with the family budget:

Kids are smart. If you take the time to explain something to them, they will eventually get it. Saying a child won’t get the budget is not an acceptable reason to cut their knowledge stream off.

Kids do worry, but that’s life. Kids worry about all sorts of stuff. (Remember being a kid). While it might seem kinder to never have to say, “We just can’t afford it” that’s not reality, and it’s way better than kids assuming items bought and paid for pop out of thin air. I’m not for telling kids all the down and dirty of a super dire money situation, but I do think kids can handle some real life knowledge. I remember when I was a kid and it always seemed worse to not know what was stressing my mom out if I asked for something we couldn’t afford – a simple “We can’t get it right now because it’s not in the budget” would have made me feel better.

Kids grow up into older kids and adults who spend money. They can either grow up into people who spend money and who know how to budget because they grew up with a budget OR they can grow up into people who spend money and who have no budgeting concepts what-so-ever. Which group would you rather your child grow into?

The budget is not that big a deal – people really overreact about budgeting sometimes, making it into this huge secondary issue, outside the norm of real life. However, a budget is part of every life so incorporating budget know-how casually and regularly is much more normal, more educational, and more practical than making the budget this big old deal.

For some tips asap read: How to totally mess up your kids when it comes to money. Later we’ll look at more ways to involve the kids in the family budget.

What do you think? Do you actively involve your kids in the family budget? Why or why not?

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Play with real money. Fake money always confused my son. When I broke out the real deal, he became much more used to the idea of money, and learned to tell coins apart.

Don’t leave the kids at home: Shopping sans kids is a total luxury; trust me I get it. However taking them to the store is one of the best opportunities you have to discuss prices, reductions, cost per pound and more.

Give them a calculator: My son loved calculators before he could really use one properly. Being that he’s just 7 he still can’t use all the functions, but he carries a calculator around with him anyhow. This might seem more like a math tool, and yeah, he likes to ask me math questions, because he can whip them out on a calculator – I’m talking, “Hey mom, what’s 1,456 – 40 + 341″ Um, ok. But he’s thinking about calculations, and that’s a good thing – it’s very money related. All this math Cedar’s been figuring out has helped him to understand what happens when you take 23 cents away from a dollar, stuff like that. I think being involved with numbers is a good thing if you’re trying to teach money skills.

What do you do to teach your kids about money? Games, books, other activities?

You might also like to read: How to totally mess up your kids when it comes to money

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